What to do With Your Holiday Bonus

For many Americans, the best thing about this season is the bonuses that employers give out to reward their workers after a year of hard work. In fact, 63 percent of companies plan to give out monetary bonuses for the holidays this year. These bonuses are often based on employee performance and range from token gifts of under $100 to well over $1,000 (in fact, the average is $1,797).

Now is a good time to begin planning what to do with your bonus, if you are expecting one. Depending on how much you get, one or more of these ideas is worth considering:

Pay off debt.

It’s always a good idea to get caught up on your debts when you have the chance. This is especially true for high-interest debt like credit cards, which you may be relying on this holiday season anyways.

Staying ahead of your debts will provide peace of mind and help build or maintain your credit score, which is important if you plan to finance a home or business in your future. Consider taking some of your bonus and making an extra payment or two – you’ll also save on interest.

Give.

It is the holiday season, after all.

Consider taking some of your bonus and spending it on others instead of yourself. This can take many forms – maybe you’re just buying more expensive gifts for your family and friends, or maybe you’re purchasing items to donate to the needy.

One great idea for helping those less fortunate is to create “blessing bags” to give out to the homeless. These can contain any items that the homeless need during cold months, or all year round – socks, wet wipes, hygiene products, snacks, and small amounts of cash. These can all fit inside a large plastic storage bag and be kept in the car for opportunities to give out. Making these can be a fun activity to do with your family, and you can even go the extra mile and include a small, personalized note in each bag.

Treat Yourself.

At the opposite end of the spectrum, it isn’t a sin to spend some of your hard-earned money on yourself. If you’re already in a comfortable spot financially, this can be a larger percentage of your holiday bonus. For most of us it’s probably best to keep this to between 10-20%, especially if your bonus is more than $100.

Go out to dinner, buy a new book or movie or game, see a show, take a trip to a museum – these are some good, relatively affordable ways to spend some money on yourself and not feel guilty afterwards. After all, the holidays are supposed to be joyful.

Save.

This one is less fun, but it’s very important.Traditional financial advice states that you should have between three and six months’ worth of income saved in case of an emergency such as a medical disaster or unemployment. Having more than that can’t hurt, either.

This is a piece of financial wisdom that staggering numbers of Americans are not able to (and possibly can not) follow. Well over half of Americans have less than $1,000 in their savings accounts, which is nowhere close to enough to cover a major medical emergency or job loss.

Saving money can be difficult when you’re living paycheck-to-paycheck. Take steps to find balance in your financial life, and use some of your holiday bonus to get started.

Invest.

This is different from saving, because your emergency savings should be kept in a relatively safe place like a savings account. Investing is where you get to take risks and, hopefully, reap the rewards.

Investing through a 401(k) or IRA is one of the most important ways to build wealth for retirement. A holiday bonus can be a great opportunity to get one started, or make a large contribution and see your account’s growth start to take off.

We’re obviously biased, but we also can’t recommend enough that you look into some crowdfunding investments. This isn’t the same type of crowdfunding as Kickstarter or GoFundMe – these are real investments we’re talking about, made possible by the JOBS Act.

American Homeowner Preservation, for example, offers up to 12% returns, paid out monthly, and you can do everything online in just a few minutes. Our minimum investment is only $100. Many other online crowdfunding portals are simple and easy to use, and offer decent returns (few have minimums as low as $100, however).

Plus, by investing in AHP, you’re getting the double benefit of a great return plus the ability to do what we talked about earlier – give – in the spirit of the holidays. An investment in AHP is an investment in American families and homeowners, most of whom are crushed by unaffordable debt. Earning while helping them out is a holiday gift anyone can feel good about.

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